WeightWatchers 2004 Annual Report Download - page 13

Licensing
As a highly recognized global brand, Weight Watchers is a powerful marketing tool for us and for
third parties. We currently license our Weight Watchers brand in certain categories of food, books and
other products. This year, for example, we introduced Weight Watchers branded meal, snack and
dessert products developed in partnership with noted food manufacturers. We believe that opportunities
exist to further capitalize on the strength of our brand and the loyalty of our members by more
aggressively licensing our brand while maintaining its integrity.
Food and Beverage Trademarks
At the time of our acquisition by Artal Luxembourg, we and H.J. Heinz Company (‘‘Heinz’’)
formed WW Foods, LLC, or WW Foods, a 50-50 joint venture, under which we maintain and preserve
the Weight Watchers trademarks covering food and beverages. WW Foods granted an exclusive,
worldwide, royalty-free, perpetual license to Heinz to use the food and beverage trademarks for use on
food products in its core categories (including frozen dinners, frozen breakfasts, frozen desserts
(excluding ice cream), frozen pizza and pizza snacks, frozen potatoes, frozen rice products, ketchup,
tomato sauce, gravy, canned tuna or salmon products, soup, noodles (excluding pasta), and canned
beans and pasta products), and for use only in Australia and New Zealand in certain additional food
product categories (including mayonnaise, frozen vegetables, canned fruits and canned vegetables). The
food and beverage related trademarks may be used by Heinz only on Heinz licensed products that have
been specially formulated to be compatible with our dietary principles. We have been granted a similar
license by WW Foods on all other food and beverage products.
There are certain food and beverage trademarks covering the Heinz core categories that because
of local laws, could not be effectively transferred to WW Foods. These include trademarks registered in
multiple trademark classes and certain other trademarks. We maintain legal ownership of these
trademarks and hold them in custody for the benefit of WW Foods. Heinz retains in its core categories
(as described in the paragraph above) an exclusive royalty-free license to use these food and beverage
trademarks that we hold in custody for WW Foods. We have undertaken to contribute any of these
custodial trademarks (or any portion covering food and beverage products) to WW Foods if WW
Foods determines that the transfer may be achieved under local law. Heinz paid us an annual fee of
$1.2 million until September 2004 in exchange for our serving as the custodian of the food and
beverage trademarks held for the benefit of WW Foods.
Other Marks
We maintain exclusive ownership of all service marks and trademarks other than food and
beverage trademarks and, except for the rights granted to WW Foods and to Heinz, we have the
exclusive right to use all these marks for any purpose, including their use as trademarks for all products
other than food and beverage products.
Program Standards, Program Information and Related Trademarks
We have exclusive control of the dietary principles to be followed in any eating or lifestyle regimen
to facilitate weight loss or weight control employed by the classroom business. We also maintain
exclusive ownership of all program information, consisting of information and know-how relating to any
weight-loss program, terminology and trademarks or service marks used to identify the programs or
terminology. We granted an exclusive, worldwide, royalty-free license to WW Foods, for sublicense to
Heinz in its core categories as described above, to use the terminology and the related trademarks and
service marks, and we provided WW Foods (which provided Heinz) with access to and a right to use
this information as may be reasonably necessary to develop, manufacture or market food and beverage
products in accordance with our dietary principles. Heinz granted a worldwide, royalty-free license to
5